Many years ago, when you had a more luxurious car, most of us assumed the insurance premiums would be higher as well. No, this is not the case nowadays. There has been the introduction of the CLEAR system. This system computes your premiums based on your actual loss events.
What is a CLEAR system?
CLEAR, also known as the Canadian Loss Experience Automobile Rating, is a system that rather calculates the value of your vehicle . But, it also checks on its rating from losses or damage records. Simply, it means your property is premium rated under the subject of all the claims filed. These results are for that particular make and model.
Normally, statistics are done for all the claims made every year for any make of vehicle. Be it an injury or wear and tear claim, all are taken into consideration. CLEAR uses the data from the insurance claims for assessment for all vehicles developed for the U.S and Canadian markets. Upon completing the computation, a vehicle, depending on the make and model, is assigned a rate group ranging from 1-60.
When your rate group lies at the very top, you have a higher claim risk. Therefore, you tend to pay more premium amounts for your hard-earned vehicle. Conversely, when you have a lower rate group, you have lower claim risks. Your insurance rates will certainly turn out to be lower. The rate groups are annually updated to consider other elements such as aging and vehicle experience in the real world.
The data offered by IBC Groupement des assureurs automobiles (GAA) is adjusted. It is also examined for its consistency.Then, it is adjusted to abolish any influences that are not directly part of the vehicle. Most insurers in Canada use CLEAR as a tool to assess the particular claim of a vehicle. It also shows its frequency and cost alongside its likelihood to be stolen.
Benefits of the CLEAR rating system
Insurance companies utilize Canadian Loss Experience Automobile Rating to make predictions of future claims.Consequently, they set lower premium charges for vehicle owners with lower rate groups and few losses.
For instance, it is cheaper to get a Chevrolet Spark than a Nissan Micra, a popular modern small car with a higher percentage of buyers in Canada. However, it might raise higher insurance rates than the other luxurious vehicle due to its fewer safety features.
Most insurers and consumer associations across the country highly encourage the adoption of the CLEAR system. They reward clients who go for the vehicle models that suffer fewer insurance losses. They advise car manufacturers to establish safer vehicles with cheaper repairs and are less prone to theft cases.
A pool of factors helps calculate the vehicle owner’s premium rates, including region and driving record. Most insurers in Canada today have adopted the CLEAR system that assists them in quoting accurate insurance rates based on the vehicle’s loss occurrences. They use the data from the insurance claim to speculate actual and expected claims. It has played a crucial role in assigning rate groups for different car models. Clients now pay for their premiums depending on the intensity of their rate groups.